What do we spend at Christmas?
A typical household in the UK spends just over £2,500 in a month.
But in the run up to Christmas our spending habits change. We spend on average almost £740 more in December, which is 29% more than in a typical month.
What do we spend it on?As you can see from the chart, our spending on items - which normally make up only a small amount of our shopping - increases in December:
Spending on video and music equipment and books grows the most, with book sales doubling in December. Spending on food and alcohol also increases, going up by an average of 20% and 38% respectively.
Conversely, our spending on goods such as paints and hardware goes down by 21%, as we delay these jobs until after Christmas.
How has our spending at Christmas changed over time?
The most popular Christmas presents from over the years are now seen as classics of their time: Rubik’s cubes, BMX bikes and Tamagotchis.
Others seem to be timeless. When the original Star Wars film was released more than 30 years ago, the Millennium Falcon cost around £20. Fast forward to The Rise of Skywalker in 2019 and the toy is still in the bestseller lists at around £100.
The way we buy things is also changing. The value of online shopping has almost doubled over the past five years. In 2019 online spending rose to 21% of our overall spend in December.
And new events such as Black Friday and Cyber Monday mean that we spend more in November too, particularly as many shops have moved from one-day to week-long events to tempt us to buy our gifts earlier.
Why is the Bank of England interested in what we spend?
Here at the Bank of England we regularly look at measures of household spending.
Along with other things such as spending by businesses and the amount of goods we buy and sell abroad, this helps us form a judgement about the overall strength of the economy. Household spending is particularly important as it forms most of total spending in the economy.
But we need to be careful. Just because people spend more at Christmas doesn’t necessarily mean the economy is strong.
To help us the Office for National Statistics Opens in a new window (ONS) publishes measures of spending that are adjusted to take away the impact of seasonal events such as Christmas. This helps us capture the true strength of spending across the UK economy.
The festive period in 2018 was a good example of this. Even though consumer spending rose by nearly 9% between November and December, on a seasonally-adjusted basis it actually fell.
It’s these seasonally adjusted figures that you’ll normally see quoted in the news for economic data like consumer spending, output or inflation.
Taking all of this information on the economy together, we set interest rates – normally eight times a year – to help to ensure that price rises are low and stable. By meeting this target and for inflation, we help support a stable and healthy economy.